Is Templeton Global Smaller Companies A (TEMGX) a Strong Mutual Fund Pick Right Now?
On the lookout for a Global - Equity fund? Starting with Templeton Global Smaller Companies A (TEMGX) should not be a possibility at this time. TEMGX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
TEMGX is classified in the Global - Equity segment by Zacks, an area full of possibilities. Even though Global - Equity mutual funds invest in bigger markets like the U.S., Europe, and Japan, these kinds of funds aren't limited by geography. Rather, they offer an investment strategy that utilizes the global economy to provide stable returns.
History of Fund/Manager
Franklin Templeton is based in San Mateo, CA, and is the manager of TEMGX. Templeton Global Smaller Companies A debuted in June of 1981. Since then, TEMGX has accumulated assets of about $1.21 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 12.74%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 11.16%, which places it in the top third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 16.8%, the standard deviation of TEMGX over the past three years is 22.28%. The standard deviation of the fund over the past 5 years is 17.8% compared to the category average of 13.73%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 1.07, which means it is hypothetically more volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. With a negative alpha of -4.48, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, TEMGX is a load fund. It has an expense ratio of 1.31% compared to the category average of 1.13%. So, TEMGX is actually more expensive than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment has no minimum amount.
Bottom Line
Overall, Templeton Global Smaller Companies A ( TEMGX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, Templeton Global Smaller Companies A ( TEMGX ) looks like a poor potential choice for investors right now.
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